65% of All Companies With Shared Services Have Cut Costs by 21% or More
Shared Services Organisations have achieved dramatic improvements in cost and productivity, according to The Hackett Group’s latest Book of Numbers research. One key finding illustrated that companies which are seeking to move up the value chain, are implementing a multi-layer shared services model that incorporates transaction processing centers in low-cost regions, centers of excellence, and high-level onsite support for analysis and decision-making. Many SSOs have also expanded beyond finance to incorporate functions such as IT, procurement, and HR.
“With a nearly 50% increase in use over the past three years, shared services has become the standard approach to corporate finance,” said Hackett Finance Shared Services Advisory Program Leader Dr. Penny Weller. “These centres have played a critical role in helping reduce the cost of finance. Today, typical companies spend almost 40% less on finance operations than they did in 1992. World-class finance organisations, which spend only half of what typical companies do, have seen even greater cost reductions.”
According to Hackett’s Bryan Hall, “Across the board, the results that shared services has helped companies generate is quite impressive. Our research finds that 65% of all companies with SSOs have cut costs by 21% or more, with some seeing savings of over 60%. At the same time, they’re showing dramatic improvements in productivity, quality, and customer service.”
According to Hackett’s Roy Barden, “As next-generation SSOs move beyond pure transaction processing, world-class SSOs are evolving towards a three layer model. Most have established large volume transaction processing centres, often in low cost labour markets. In addition, they’ve established centres of excellence which are responsible for service delivery and are the primary interface to the business leaders. These are often much closer to the business geographically. Finally, high-level knowledge workers are likely to be located with the business units, so they can serve as on-site business partners. All this puts them in a better position to provide value-added services such as decision support and reporting and analysis. Within this three-layer model, we’re also seeing a growth in multifunction SSOs, incorporating a wide range of back-office operations beyond finance.
“We’re also seeing several other emerging trends,” said Barden. “Many companies are also now making second-phase movements of operations from near-shore locations to low-cost labour markets, and most are already doing significant work offshore, either through SSOs or outsourcers. The use of outsourcers is certainly on the rise.”
